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EXHIBIT 10.1
THE GEON COMPANY
INCENTIVE STOCK PLAN
(1993 Plan)
(as amended and restated through November 4, 1998)
PURPOSE
The purpose of the Incentive Stock plan (the "Plan") is to promote the
interests of the stockholders by furthering the long-term performance of The
Geon Company (the "Company") and to enable the Company to be competitive in
encouraging key employees who perform services of special importance to the
management, operation and the development of the business of the Company or its
subsidiaries, to remain in its service, to attract others to it, and to provide
such employees with an additional incentive to contribute to the prosperity of
the Company and its stockholders.
INCENTIVES
Incentives under the plan may be granted in any one or a combination
of (a) stock options which may consist of (i) Incentive Stock Options (or other
statutory stock options) and/or (ii) Non-Qualified Stock Options; (b) Stock
Appreciation Rights; (c) Limited Stock Appreciation Rights; and (d) stock awards
which may consist of (i) Restricted Stock and/or Performance Incentive Stock
(together "Incentives"). All incentives shall be subject to the terms and
conditions set forth herein and to such other terms and conditions as may be
established in the manner prescribed by the Board of Directors.
ADMINISTRATION
To the extent permitted by law the Board may delegate any or all of its
powers under this Plan to a committee (the "Committee") of not less than two
Directors, who are not Officers or employees of the Company, and who are not
eligible to participate in the Plan and have not participated in the Plan for at
least one year. The Board or the Committee may delegate to the chief executive
officer of the Company its duties under the Plan, with respect to not more than
10% of the shares authorized under this Plan, pursuant to such conditions or
limitations as the Board or Committee may establish, except that only the Board
or the Committee may select participants and grant options, appreciation rights
and stock awards to participants who are subject to Section 16 of the
Securities Exchange Act of 1934, as amended. The Board, the Committee or the
chief executive officer, as the case may be, shall be referred to as the
"Granting Authority."
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ELIGIBILITY
Regular key employees of the Company and its subsidiaries, including
officers whether or not Directors, shall be eligible to participate in the Plan.
Directors who are not regular employees are not eligible. Participation in the
Plan shall be limited to those key employees of the Company selected by the
Granting Authority.
STOCK OPTIONS
The Granting Authority may in its discretion from time to time grant to
eligible employees options to purchase, except as provided below, at a cash
price not less than 100% of the fair market value on the date of the grant (the
"option price"), treasury stock or authorized but unissued common stock of the
Company, subject to the conditions set forth in this Plan. Within 60 days of the
Company's initial public offering, the board or the Committee may grant options
to purchase common stock of the Company at less than 100% of the fair market
value to Company employees who hold stock options from The B.F. Goodrich Company
in substitution for such options in compliance with Section 424 of the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code") on condition that
(i) the eligible employees surrender all their then unexercised stock options
issued by The B.G. Goodrich Company; (ii) the excess of the aggregate fair
market value of all stock subject to the option immediately before such
substitution over the aggregate option price of such stock; and (iii) the new
options do not provide the participant any additional benefits than the
surrendered options.
The Granting Authority, at the time of granting to any employee an
Incentive under the Plan, may designate options Incentive Stock Options pursuant
to Section 422 of the Internal Revenue Code or any other statutory stock option
that may be permitted under the Internal Revenue Code from time to time,
provided, however that (i) the date on which such options and related
appreciation rights shall expire, if not exercised, may not be later than ten
years after the date of grant of the option, (ii) in the case of options
designated as Incentive Stock Options, the aggregate fair market value of stock
optioned to an employee (determined at time of grant) under this plan or any
other plan of this Company and its subsidiaries with respect to which incentive
stock options are exercisable for the first time by such employee during any
calendar year shall be limited to $100,000 (unless such Section 422 limit is
revised, then in conformance with such revision) and (iii) in case of any other
statutory stock option permitted under the Internal Revenue Code, then in
accordance with such provisions as in effect from time to time.
Within the foregoing limitations, the Granting Authority shall have the
authority in its discretion to specify all other terms and conditions, including
but not limited to provisions for the exercise of options in installments, the
time limits during which options may be exercised, and in lieu of payment in
cash, the exercise in whole or in part of options by tendering common stock of
the Company owned by the employee, valued at the fair market value on the date
of exercise or other acceptable forms of consideration equal in value to the
option price. The Board or Committee may, in its discretion, establish rules or
conditions with respect to utilization of common stock for all or part of the
option price. Furthermore, the Board or Committee may, in its discretion,
establish rules or conditions for the surrendering of a portion of a grant in
satisfaction of any withholding tax obligation.
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APPRECIATION RIGHTS
The Granting Authority may, in its discretion, grant Stock Appreciation
Rights and Limited Stock Appreciations Rights (as hereinafter described) in
connection with any stock option, either at the time of grant of such stock
option or any time thereafter during the term of such stock option. Except for
the terms of this Plan with respect to Limited Stock Appreciation Rights, each
such appreciation right shall be subject to the same terms and conditions as the
related stock option and shall be exercisable at such times and to such extent
as the Granting Authority shall determine, but only so long as the related
option is exercisable. The number of both Stock Appreciation Rights or Limited
Stock Appreciation Rights granted shall not exceed the number of shares which
may be purchased upon exercise of a related option. The number of both Stock
Appreciation Rights and Limited Stock Appreciation Rights shall be reduced not
only by the number of appreciation rights exercised but also by the number of
shares purchased upon the exercise of a related option. A related stock option
shall cease to be exercisable to the extent surrendered for the exercise of an
appreciation right.
STOCK APPRECIATION RIGHTS
Upon surrender to the Company of the unexercised related stock option,
or any portion thereof, a Stock Appreciation Right shall entitle the optionee to
receive from the Company in exchange therefor (a) a payment in stock as
determined below, or (b) to the extent determined by the Granting Authority, the
cash equivalent of the fair market value of such payment in stock on the
exercise date had the employee been awarded a payment in stock instead of cash,
or any combination of stock and cash. The number of shares which shall be issued
pursuant to the exercise of Stock Appreciation Rights shall be determined by
dividing (1) the total number of Stock Appreciation Rights being exercised
multiplied by the amount by which the fair market value of a share of common
stock of the Company on the exercise date exceeds the option price of the
related option, by (2) the fair market value of a share of common stock of the
Company on the exercise date. No fractional shares shall be issued.
LIMITED STOCK APPRECIATION RIGHTS
The grant of a Limited Stock Appreciation Right will permit a grantee
to exercise such right for cash during a sixty-day period commencing on the date
on which any of the events described in the definition of Change of Control
occurs, each of which events shall hereinafter be known as a "Change in Control
Event." Notwithstanding the foregoing, however, if the Change in Control Event
occurs within six months after the date on which a Limited Stock Appreciation
Right was granted, then the sixty-day period during which such right may be
exercised for cash shall commence six months after the date on which the Limited
Stock Appreciation Right was granted. The amount of cash received upon the
exercise of any Limited Stock Appreciation Right under either of the preceding
two sentences shall equal the excess, if any, of the fair market value of a
share of the Company's common stock on the date of exercise of the Limited Stock
Appreciation Right, over the option price of the stock option to which the
Limited Stock Appreciation Right relates.
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STOCK AWARDS
The Granting Authority in lieu of or in addition to granting stock
options with or without appreciation rights under this Plan, may make awards
("stock awards") in common stock or denominated in units of common stock. All or
part of any stock award may be subject to conditions established by the Granting
Authority, which may include, but are not limited to, continuous service with
the Company ("Restricted Stock") and attainment of specific performance
objectives ("Performance Stock"). Stock awards may include the awarding of
additional stock ("Additional Stock") upon attainment of performance objectives.
If the common stock is awarded subject to attainment of performance objectives
or continued service with the Company, the stock may be registered in the
participant's names when initially awarded, but possession of the certificates
for the stock, or appropriate book entry, shall be retained by the Company for
the benefit of participants, subject to the conditions of the stock awards. In
such event, each participant shall have the right to receive all dividends and
other distributions made with respect to stock awards registered in his or her
name and shall have the right to vote or execute proxies with respect to such
registered shares. Stock awards with respect to which the restrictions are not
removed in accordance with the provision of the stock awards shall be forfeited
and shall revert to the treasury of the Company.
ASSIGNABILITY
Incentives granted under this Plan shall not be transferable other than
by will or the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined in the Internal Revenue Code and such
Incentive shall be exercisable during the employee's lifetime only by the
employee or by the employee's guardian or legal representative or permitted
transferee or, in the event of death, by the employee's estate or by a person
who acquires the Incentive by bequest or inheritance.
CORPORATE REORGANIZATION
The number and kind of shares authorized for delivery under this Plan
and, if appropriate, the purchase price per share, shall be adjusted
appropriately in the event of any stock split, stock dividend, combination of
shares, merger, consolidation, reorganization, or other change in the nature of
the shares of the Company (any one or more of the foregoing hereinafter a
"corporate reorganization"). The determination of what adjustments, if any, are
appropriate shall be made by the Board or Committee.
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CORPORATE REORGANIZATIONS
In the event of a dissolution or liquidation of the Company or a
merger, consolidation, sale of all or substantially all of its assets, or other
corporate reorganization in which the Company is not the surviving corporation
or any merger in which the Company is the surviving corporation but the holders
of its common stock receive securities of another corporation, any outstanding
options hereunder shall terminate, provided that each optionee shall, in such
event, have the right immediately prior to such dissolution, liquidation,
merger, consolidation, sale of assets or reorganization in which the Company is
not the surviving corporation or any merger in which the Company is the
surviving corporation but the holders of its common stock receive securities of
another corporation, to exercise any unexpired option and/or Stock Appreciation
Right in whole or in part without regard to the exercise date contained in such
option. Nothing herein contained shall prevent the assumption and continuation
of any outstanding option or the substitution of a new option by the surviving
corporation.
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CHANGE IN CONTROL
Options and any related appreciation rights that are not exercisable
shall become immediately exercisable in the event of a Change in Control.
Anything to the contrary notwithstanding, in the event a Change in Control of
the Company shall occur, then an interim removal of restrictions on all or a
portion of the Performance Stock award and the awarding of Additional Stock, if
appropriate, (the "Interim Action") shall be made to each participant within
five days following the occurrence of the Change in Control with respect to all
outstanding Performance Stock awarded to such participant. The Interim Action
with respect to each outstanding Performance Stock award shall be calculated (i)
based upon the performance objectives attained as of the end of the most recent
quarter in the plan cycle related to each such award (the "Determination Date")
ending prior to the Change in Control and as if the Determination Date were the
end of the last quarter in such plan cycle and (ii) based upon the number of
full and partial months through the occurrence of the Change in Control that
have elapsed in the plan cycle with respect to each such Performance Stock
award. The amount of such Interim Action with respect to each such outstanding
Performance Stock award shall be a prorated portion (based upon the number of
full and partial months through the occurrence of the Change in Control that
have elapsed in the plan cycle related to such award) of the amount of the
Performance Stock award that would have been payable to the participant at the
end of the relevant plan cycle, calculated assuming attainment of the greater of
(i) 100% of the performance objective with respect to such plan cycle or (ii)
the actual percentage (annualizing a partial year, if any) of the performance
objective attained as of the Determination Date and as if the Determination Date
were the end of the plan cycle related to such Performance Stock award. The
Interim Action shall not reduce the obligation of the Company to make a final
removal of restrictions or award of additional stock ("Final Action") under the
terms of the Plan, but any Interim Action made with respect to a Performance
Stock award shall be offset against the Final Action, if any, required under the
terms of the Plan with respect to such Performance Stock award at the actual end
of the plan cycle related to such Performance Stock award. Notwithstanding the
foregoing, in no event shall a participant be required to return stock or refund
to the Company, or have offset against any other payment due such participant
from or on behalf of the Company, all or any portion of an Interim Action. In
the event of a Change in Control all restrictions on Restricted Stock shall
lapse and the participant shall immediately receive all Restricted Stock free of
further restrictions. For purposes of the Plan, a Change in Control shall mean:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of voting securities of the Company where such
acquisition causes such Person to own 20% or more of the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for
purposes of this subsection (a), the following acquisitions shall not
be deemed to result in a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii)
any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by
the Company or (iv) any
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acquisition by any corporation pursuant to a transaction that complies
with clauses (i), (ii) and (iii) of subsection (c) below; provided,
further, that if any Person's beneficial ownership of the Outstanding
Company Voting Securities reaches or exceeds 20% as a result of a
transaction described in clause (i) or (ii) above, and such Person
subsequently acquires beneficial ownership of additional voting
securities of the Company, such subsequent acquisition shall be treated
as an acquisition that causes such Person to own 20% or more of the
Outstanding Company Voting Securities; and provided, further, that if
at least a majority of the members of the Incumbent Board determines in
good faith that a Person has acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of the Outstanding Company Voting Securities inadvertently, and
such Person divests as promptly as practicable a sufficient number of
shares so that such Person beneficially owns (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) less than 20% of the
Outstanding Company Voting Securities, then no Change of Control shall
have occurred as a result of such Person's acquisition; or
(ii) individuals who, as of November 6, 1996, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a director subsequent to November 6, 1996 whose election, or
nomination for election by the Company's shareholders, was approved by
a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board; or
(iii) The approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company or the
acquisition of assets of another corporation ("Business Combination")
or, if consummation of such Business Combination is subject, at the
time of such approval by shareholders, to the consent of any government
or governmental agency, the obtaining of such consent (either
explicitly or implicitly by consummation); excluding, however, such a
Business Combination pursuant to which (i) all or substantially all of
the individuals and entities who were the beneficial owners of the
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than 60% of, respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation that as a result of such
transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding Company Voting
Securities, (ii) no Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation resulting from such
Business Combination) beneficially
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owns, directly or indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from
such Business Combination or the combined voting power of the then
outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Business Combination and (iii)
at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or
(iv) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
Notwithstanding any other provision of this Plan, during the 60-day
period from and after a Change of Control (the "Exercise Period"), unless the
Granting Authority shall determine otherwise at the time of grant, an optionee
shall have the right, whether or not the stock option is fully exercisable and
in lieu of the payment of the exercise price for the shares of Common Stock
being purchased under the stock Option and by giving notice to the Company, to
elect (within the Exercise Period) to surrender all or part of the stock option
to the Company and to receive cash, within 30 days of such notice, in an amount
equal to the amount by which the Change of Control Price per share of Common
Stock on the date of such election shall exceed the exercise price per share of
Common Stock under the stock option (the "Spread") multiplied by the number of
shares of Common Stock granted under the stock option as to which the right
granted under this Section shall have been exercised.
For purposes of the Plan "Change of Control Price" shall mean the
higher of (i) the highest reported sales price, regular way, of a share of
Common Stock in any transaction reported on the New York Stock Exchange
Composite Tape or other national exchange on which such shares are listed or on
NASDAQ during the 60-day period prior to and including the date of a Change of
Control or (ii) if the Change of Control is the result of a tender or exchange
offer or a Business Combination, the highest price per share of Common Stock
paid in such tender or exchange offer or Business Combination; provided,
however, that, in the case of Incentive Stock Options and Stock Appreciation
Rights relating to Incentive Stock Options, the Change of Control Price shall be
in all cases the Fair Market Value of the Common Stock on the date such
Incentive Stock Option or Stock Appreciation Right is exercised. To the extent
that the consideration paid in any such transaction described above consists all
or in part of securities or other noncash consideration, the value of such
securities or other noncash consideration shall be determined in the sole
discretion of the Board.
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SHARES AVAILABLE FOR INCENTIVES
Subject to adjustment as provided in the following paragraph, there is
hereby reserved for issuance under the Plan, 2,500,000 shares in 1993, and in
each calendar year thereafter one% of the outstanding shares of the Company's
Common Stock as of the first business day of each calendar year. The shares
available for granting Incentives in any year shall be increased by the number
of shares available under the Plan in previous years but not covered by
Incentives granted under the Plan in those years plus any shares as to which
options or other benefits granted under the Plan have lapsed, expired,
terminated, forfeited or been canceled for any reason without being exercised.
However, upon surrender of a stock option on exercise of the related
appreciation right, the number or shares subject to the surrendered option shall
be charged against the maximum number of shares issuable under the Plan and
shall not be available for future options.
FAIR MARKET VALUE
For all purposes of this Plan the fair market value of a share of stock
shall be the mean of the high and low prices of the Company's common stock on
the relevant date or, if no sale was made on such date, then on the next
preceding day on which such a sale was made (a) if the Company's stock is listed
on the New York Stock Exchange, as reported on the New York Stock Exchange
Composite Transactions listing (or similar report), or (b) if the Company's
stock is listed on the NASDAQ National Market System, then as reported on such
system, or (c) if not listed on either the New York Stock Exchange or the NASDAQ
National Market System, as determined by the Board or Committee.
TERMINATION OF EMPLOYMENT
Upon the termination of employment of any employee for any reason, his
or her options and any related appreciation rights shall terminate at the time
with respect to all shares which were not then purchasable by him or her,
provided, however, that if the termination of employment is by reason of death,
disability or retirement the Board may in its sole discretion provide that such
options and related appreciation rights shall not terminate upon death,
disability or retirement and may become immediately exercisable or continue to
become exercisable in accordance with the terms of the original grant.
COMPLIANCE WITH LAW
Notwithstanding any other provisions of the Plan, the issuance or
delivery of any shares may be postponed for such period as may be required to
comply with any applicable requirements of any national securities exchange or
any requirements under any other law or regulation applicable to the issuance or
delivery of such shares, and the Company shall not be obligated to issue or
deliver any such shares if the issuance or delivery thereof shall constitute a
violation of any provision of any law or any regulation of any governmental
authority or any national securities exchange.
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EMPLOYMENT
Nothing in the Plan or in any agreement entered into pursuant to the
Plan shall confer upon any participant the right to continue in the employment
of the Company or affect any right which the Company may have to terminate the
employment of such participant.
GRANTING AUTHORITY'S DETERMINATION
The Granting Authority's determinations under the Plan including
without limitation, determinations of the participants to receive awards or
grants, the form, amount and timing of such awards or grants, the terms and
provisions of such awards or grants and the agreements evidencing same, and the
establishment of any performance objectives need not be uniform and may be made
by it selectively among participants who receive, or are eligible to receive
Incentives under the Plan whether or not such participants are similarly
situated.
INTERPRETATION AND AMENDMENT
The Board or Committee shall have the power to interpret the provisions
of this Plan and of all Incentives granted hereunder and the Board shall have
the power to amend this Plan from time to time, provided, however, that no
amendment shall be made without the approval of stockholders which has the
effect of increasing the number of shares of stock subject to this Plan (other
than in connection with a corporate reorganization), changing the class of
employees eligible to participate, reducing the purchase price of shares
pursuant to options to an amount less than 100% of the fair market value on the
date of grant or extending the time during which options may be granted
hereunder, or otherwise materially increasing the benefits accruing to
participants under this Plan. The Granting Authority shall have the authority to
amend the terms of any Incentive granted by it subject to the foregoing
limitations and provided that no such amendment shall deprive any optionee of
any rights thereunder without his written consent unless such amendment or
rescission is required by law. In furtherance and not in limitation of the
authority granted in this paragraph, any interpretation by a majority of the
Incumbent Directors then serving on the Committee or the Board as to whether a
sale or other disposition of assets by the Company or an acquisition of assets
of another corporation constitutes a "sale or other disposition of all or
substantially all of the assets of the Company or the acquisition of assets of
another corporation" for purposes of clause (iii) of the definition of "Change
in Control" above shall be final and binding for all purposes of this Plan and
any Incentive hereunder, notwithstanding that the transaction in question was,
or is contemplated to be, submitted to stockholders of the Company for their
approval and notwithstanding such approval.
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